Florida Among States With Budget Shortfalls
LABELLE, FL. -- A slumping housing market and skimpier sales tax collections will force as many as 20 states to go back and patch holes in their budgets in 2008. Most states will muddle through the current economic slowdown, but if the country dips into a recession, then even more than 20 states likely will have to make cuts to their current budgets.
The stalled housing market is pinching states across the board, but it's more severe for states such as Arizona, California, Nevada, and Florida that rely heavily on real estate taxes. A drop in home sales and prices mean states take a smaller cut - both in real estate-related and sales taxes as most people who buy homes also purchase new appliances and carpeting and spend big money on home improvements.
Florida, for example, is particularly dependent on sales tax revenue because it does not have a state income tax. California is struggling to plug a projected $9.8 billion deficit for 2008-2009, while Florida is looking at a $2.5 billion estimated budget shortfall.
Other states facing shortfalls include Maine, Michigan, New Hampshire, Oklahoma, Kentucky and Virginia. Unlike the federal government, which can run a deficit, states must balance their books. That means if tax revenues come in less than what a state had projected, then a state either has to cut programs or find other sources of revenue. The fiscal year begins July 1 for all but four states (Alabama, Michigan, New York and Texas). - Source Florida OPPAGA